Sales in the fourth quarter of fiscal 2015 reached US$56.6 million compared to US$57.8 million in the third quarter of 2015 and US$59.7 million in the fourth quarter of 2014. Annual sales decreased 3.8% to US$222.1 million in fiscal 2015 from US$230.8 million in 2014, but were stable year-over-year on a constant currency* basis.

Bookings totaled US$54.9 million for a book-to-bill ratio of 0.97 in the fourth quarter of fiscal 2015 compared to US$59.2 million in the third quarter of 2015 and US$57.3 million in the fourth quarter of 2014. Overall for fiscal 2015, bookings decreased 7.2% to US$223.1 million for a book-to-bill ratio of 1.00 from US$240.4 million in 2014.

Gross margin before depreciation and amortization* attained 61.2% of sales in the fourth quarter of fiscal 2015 compared to 61.4% in the third quarter of 2015 and 63.0% in the fourth quarter of 2014. In fiscal 2015, gross margin reached 61.7% of sales compared to 62.4% in 2014.

In the fourth quarter of fiscal 2015, IFRS net earnings amounted to US$2.3 million, or US$0.04 per diluted share, compared to net earnings of US$0.6 million, or US$0.01 per diluted, share in the third quarter of 2015 and US$1.2 million, or US$0.02 per diluted share, in the fourth quarter of 2014. IFRS net earnings in the fourth quarter of 2015 included US$1.3 million in after-tax restructuring charges, US$0.3 million in after-tax amortization of intangible assets, US$0.1 million in stock-based compensation costs and a foreign exchange gain of US$2.4 million.

In fiscal 2015, IFRS net earnings totaled US$5.3 million, or US$0.09 per diluted share, compared to US$0.8 million, or US$0.01 per diluted share, in 2014. IFRS net earnings in 2015 included, US$2.7 million in after-tax amortization of intangible assets, US$1.3 million in after-tax restructuring charges, US$1.3 million in stock-based compensation costs and a foreign exchange gain of US$7.2 million.

Adjusted EBITDA* totaled US$5.0 million, or 8.8% of sales, in the fourth quarter of fiscal 2015 compared to US$4.5 million, or 7.7% of sales, in the third quarter of 2015 and US$5.8 million, or 9.6% of sales, in the fourth quarter of 2014. Adjusted EBITDA amounted to US$13.8 million, or 6.2% of sales, in fiscal 2015 compared to US$14.4 million, or 6.2% of sales, in 2014.

Cash and short-term investments decreased to US$27.4 million at the end of fiscal 2015 from US$59.8 million at the end of 2014 largely due to EXFO's substantial issuer bid (SIB) and normal course issuer bid (NCIB) share repurchase plans totaling US$25.5 million.

"While financial results for fiscal 2015 are below my expectations mainly due to adverse conditions and the strength of the US dollar against a basket of currencies, I am nonetheless quite pleased with the important internal transformations implemented during 2015 that will strongly contribute to value creation in 2016 and beyond," said Germain Lamonde, EXFO's Chairman, President and CEO. "We launched EXFO Xtract, an exciting, real-time network performance and service experience analytics solution that is enjoying significant deal traction with leading customers. We resolved specific issues within our Protocol family of solutions with tangible growth results in the second half of 2015 that should accelerate during 2016. We lowered operating expenses by US$6.7 million, while additional cost savings of US$3.5 million are expected in 2016 from our August restructuring plan. We strengthened our executive team with the appointment of Philippe Morin in a new role as COO to improve global sales execution and product strategy. His vast executive experience at Ciena and Nortel will be strong assets for EXFO as we strive to expand our end-to-end network performance and service visibility business."

"We also delivered strong sales growth in our Physical-layer product line in 2015 which should continue in 2016. Given all of the above factors, fiscal 2016 promises to be far more satisfying from a growth standpoint, especially in the higher-margin Protocol area which includes solutions and systems, wireless, data centers, Cloud and web-scale service provider markets," Mr. Lamonde added. "Combined with an ongoing tight focus on operating expenses, we are targeting more than 40% growth in adjusted EBITDA to reach US$20 million in 2016, which should be achieved at a revenue level of about US$230 million."

Selected Financial Information (unaudited)

(In thousands of US dollars)

Q4 2015

Q3 2015

Q4 2014

FY 2015

FY 2014

Sales

$

56,594

$

57,781

$

59,742

$

222,089

$

230,806

Bookings

$

54,916

$

59,249

$

57,335

$

223,062

$

240,405

Book-to-bill ratio

0.97

1.03

0.96

1.00

1.04

Gross margin before depreciation and amortization*

$

34,619

$

35,500

$

37,633

$

137,050

$

143,970

61.2%

61.4%

63.0%

61.7%

62.4%

Other selected information:

Net earnings

$

2,323

$

563

$

1,204

$

5,298

$

783

Amortization of intangible assets

$

322

$

444

$

1,117

$

2,883

$

4,398

Stock-based compensation costs

$

133

$

374

$

424

$

1,295

$

1,696

Restructuring charges

$

1,637

$

−

$

−

$

1,637

$

−

Net income tax effect of the above items

$

(371)

$

(49)

$

(62)

$

(531)

$

(256)

Foreign exchange gain (loss)

$

2,425

$

(175)

$

(334)

$

7,212

$

1,634

Adjusted EBITDA*

$

4,962

$

4,462

$

5,756

$

13,779

$

14,391

Operating Expenses Selling and administrative expenses totaled US$20.5 million, or 36.3% of sales, in the fourth quarter of fiscal 2015 compared to US$20.5 million, or 35.5% of sales, in the third quarter of 2015 and US$21.5 million, or 35.9% of sales, in the fourth quarter of 2014. In fiscal 2015, selling and administrative expenses amounted to US$82.2 million, or 37.0% of sales, compared to US$86.4 million, or 37.4% of sales, in 2014.

Net R&D expenses amounted to US$10.9 million, or 19.3% of sales, in the fourth quarter of fiscal 2015 compared to US$10.9 million, or 18.9% of sales, in the third quarter of 2015 and US$10.8 million, or 18.2% of sales, in the fourth quarter of 2014. In fiscal 2015, net R&D expenses totaled US$44.0 million, or 19.8% of sales, compared to US$44.8 million, or 19.4% of sales, in 2014.

FY 2015 Highlights

Sales. Sales of Physical-layer solutions (optical and copper access) increased 9.1% year-over-year, while sales of Protocol-layer solutions (transport & datacom, wireless, service assurance and network visibility) decreased 19.1%. On a constant currency basis, the Physical-layer growth would be higher and Protocol-layer decline lower to reflect stable sales year-over-year for the combined product lines. Sales in the Americas (-1.9%) and Asia-Pacific (+0.8%) regions were relatively stable year-over-year, while sales in Europe, Middle East and Africa (EMEA) decreased 10.5%. EXFO's largest customer accounted for 7.1% of sales in fiscal 2015, while the company's top-three customers represented 14.4%. In comparison, EXFO's largest customer accounted for 6.1% of sales in 2014, while the company's top-three customers represented 11.6%.

Profitability. EXFO generated adjusted EBITDA of US$13.8 million, or 6.2% of sales, in fiscal 2015 compared to US$14.4 million, or 6.2% of sales, in 2014. Selling and administrative expenses, net R&D expenses as well as depreciation and amortization expenses decreased by a total of US$6.7 million in 2015 due to the strength of the US dollar and tight cost controls. The company's restructuring plan, which incurred after-tax expenses of US$1.3 million in the fourth quarter of 2015, is expected to deliver US$3.5 million in annual cost savings. EXFO also returned US$25.5 million to shareholders via its substantial issuer bid (SIB) and normal course issuer bid (NCIB) share repurchase plans in 2015.

Innovation. EXFO launched 13 new products or major enhancements in fiscal 2015. Key new product introductions included EXFO Xtract, a real-time analytics software platform that has been well received by network operators for critical end-to-end network performance and service visibility requirements. EXFO also introduced the NetBlazer 800 v2 series, a quad-port, field-portable, transport & datacom performance validation test solution designed to accelerate and simplify the turn-up of 1G and 10G Ethernet services. This solution is housed in the new FTB-1 Pro, a lightweight and compact test platform allowing field technicians to carry out dedicated optical, Ethernet and multi-service testing. The company also released CPRI (common public radio interface) test capabilities for fiber-to-the-antenna (FTTA) and distributed antenna system (DAS) deployments. Finally, EXFO introduced new features for its patented intelligent optical link mapping (iOLM) software and for its automated wireless fiber inspection solutions, both contributing to automate and accelerate fiber deployments in wireless access networks.

Business Outlook EXFO forecasts sales between US$55.0 million and US$60.0 million for the first quarter of fiscal 2016, while IFRS net results are expected to range between a loss of US$0.01 per share and earnings of US$0.03 per share.

This guidance was established by management based on existing backlog as of the date of this press release, seasonality, expected bookings for the remaining of the quarter, as well as exchange rates as of the day of this press release.

For fiscal 2016, EXFO is targeting adjusted EBITDA of US$20 million which should be achieved at a revenue level of about US$230 million.

Conference Call and Webcast EXFO will host a conference call today at 5 p.m. (Eastern time) to review fourth quarter and year-end financial results for fiscal 2015. To listen to the conference call and participate in the question period via telephone, dial 1-704-288-0432. Please take note the following conference ID number will be required: 24691492. Germain Lamonde, Chairman, President and CEO, and Pierre Plamondon, CPA, CA, Vice-President of Finance and Chief Financial Officer, will participate in the call. An audio replay of the conference call will be available two hours after the event until 11:59 p.m. on October 14, 2015. The replay number is 1-855-859-2056 and the conference ID number is 24691492. The audio Webcast and replay of the conference call will also be available on EXFO's Website at www.EXFO.com, under the Investors section.

About EXFO EXFO enables extraordinary experiences on global networks. Our test, service assurance and network visibility solutions allow network operators, web-scale service providers and equipment manufacturers to deliver a wealth of services to consumers, while increasing network capacity and reducing operating costs. From a company executive holding a telepresence meeting with overseas staff to a runner transferring data from wearable technology, EXFO's inherent expertise and powerful analytics render these events commonplace. Simply put, we have evolved over our 30-year history to ensure unmatched network performance and service experience on next-generation fixed and mobile networks. EXFO has a staff of approximately 1500 people in 25 countries, supporting more than 2000 customers worldwide. For more information, visit www.EXFO.com and follow us on the EXFO Blog, Twitter, LinkedIn, Facebook, Google+ and YouTube.

Forward-Looking Statements This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and we intend that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are statements other than historical information or statements of current condition. Words such as may, expect, believe, plan, anticipate, intend, could, estimate, continue, or similar expressions or the negative of such expressions are intended to identify forward-looking statements. In addition, any statement that refers to expectations, projections or other characterizations of future events and circumstances are considered forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements due to various factors including, but not limited to, macroeconomic uncertainty as well as capital spending and network deployment levels in the telecommunications industry (including our ability to quickly adapt cost structures with anticipated levels of business and our ability to manage inventory levels with market demand); future economic, competitive, financial and market conditions; consolidation in the global telecommunications test and service assurance industry and increased competition among vendors; capacity to adapt our future product offering to future technological changes; limited visibility with regards to timing and nature of customer orders; longer sales cycles for complex systems involving customers' acceptances delaying revenue recognition; fluctuating exchange rates; concentration of sales; timely release and market acceptance of our new products and other upcoming products; our ability to successfully expand international operations; our ability to successfully integrate businesses that we acquire; and the retention of key technical and management personnel. Assumptions relating to the foregoing involve judgments and risks, all of which are difficult or impossible to predict and many of which are beyond our control. Other risk factors that may affect our future performance and operations are detailed in our Annual Report, on Form 20-F, and our other filings with the U.S. Securities and Exchange Commission and the Canadian securities commissions. We believe that the expectations reflected in the forward-looking statements are reasonable based on information currently available to us, but we cannot assure that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this document. Unless required by law or applicable regulations, we undertake no obligation to revise or update any of them to reflect events or circumstances that occur after the date of this document.

*Non-IFRS Measures EXFO provides non-IFRS measures (constant currency data, gross margin before depreciation and amortization and adjusted EBITDA) as supplemental information regarding its operational performance. The company uses these measures for the purpose of evaluating historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the company to plan and forecast future periods as well as to make operational and strategic decisions. EXFO believes that providing this information, in addition to IFRS measures, allows investors to see the company's results through the eyes of management, and to better understand its historical and future financial performance.

The presentation of this additional information is not prepared in accordance with IFRS. Therefore, the information may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, the corresponding measures calculated in accordance with IFRS.

Constant currency data is data before foreign currency impact. Data for the current period is translated using foreign exchange rates of the corresponding period from the preceding year.

Gross margin before depreciation and amortization represents sales less cost of sales, excluding depreciation and amortization.